Hello everyone! I have listed many of the main options that a person may choose from when they are faced with a difficult financial situation in regards to debt problems.


It is extremely important that debtors do their research before they commit to anything. I've listed the options below:
1. Find Another Source of Income - Debtors should consider taking responsibilities into their own hands and try to find 2 to 3 jobs to pay off their debt if their primary job is not allowing them to meet their monthly expenses. If this is not possible then debtors should consider the following options.


2. Consumer Credit Counseling - These agencies will try to call your creditors on your behalf to reduce the interest rate on the loan. This type of debt relief will typically not help much in regards to the monthly payment since the maturity due date will be shortened which will off-set the monthly savings that you should get from the reduction on the interest.

3. Bankruptcy Ch.7 - This type of debt relief will eliminate all of your debts and forgive the debtors from having to pay back their creditors. In 2005, new bankruptcy laws were enforced; and therefore, it is making it more difficult for the general public to file for this type of bankruptcy.

4. Bankruptcy Ch.13 - This is the more common form of bankruptcy that people will be able to qualify for today. With this form of bankruptcy, debtors are still required to pay back a portion of what is owed through some sort of payment plan.

My recommendation is that bankruptcy should only be considered as a worst case scenario due to the impact that it has on one's credit profile. It may stay on the credit report for up to 10 years which will make it very difficult for anyone to qualify for new credit. If this is an option that you seek then please find a professional and credible bankruptcy attorney in your area to find out more information.

5. Debt Consolidation Loan - This is the traditional method of debt relief, but for those that are in a tough financial bind, it may be very difficult for them to qualify for a new loan if they do not have a good FICO score, and a low debt-to-income ratio. Also, due to the current "credit crunch" in the U.S. banking system, loan guidelines are really starting to tighten up. At the same time, please remember that the all a debt consolidation loan is is the transfer of debt from the existing lines/loans into a new line/loan with the intention of a lower monthly payment. At the end of the day, if a debtor is not good with his/her finances then he/she may eventually be in the same situation again later down the line.


6. Debt Settlement - Debt Settlement is a form of debt relief where expert negotiators will call a debtor's creditors on his/her behalf to get them out of debt by up to 40-60% of what he/she owes, get them out of debt in 2-3 years, and to cut his/her monthly payments by half. This program is designed for those that are in a tough financial hardship and it is an alternative to bankruptcy. Basically the debt settlement company will set-up a trust account for its clients to make monthly payments into in which these funds will be used for the negotiations. By doing so, the client is typically not required to pay a lump sum right from the start of the program. Instead, the payments will be made over a 24-36 month time frame. Remember that a credible debt settlement company should have an approval process with a full staff of underwriters, a legal department for legal accounts, and a customer service department to assist their current clients with any questions or concerns.


These are basically the options that are available today for debtors. I hope this information was useful and that it may help out.

Good Luck!